Ethereum Plunges 25% to 7-Month Low, Recovery Uncertain

Ethereum, the second-largest cryptocurrency by market capitalization, experienced a significant correction on February 3, testing a 7-month low and crashing by 25% on a daily basis. Despite the sharp decline, the crypto managed to recover slightly, but the overall market sentiment remained bearish.

The correction in Ethereum came after a period of broad-based selling, which saw the crypto reset back to the $2,125 level. This marked the biggest loss for Ethereum in the last 24 hours, as it recorded a 25% crash to its 7-month low. However, the crypto has since seen a nice recovery, but it currently appears oversold on the daily scale.

The critical $2,100 support level is now under threat, and if it fails to hold, Ethereum could be subject to a bigger loss, potentially triggering a mid-term bearish move. This could bring an end to the bullish cycle from a technical standpoint. Meanwhile, a strong recovery above $3,400 could bring back positive sentiment to the market.

From a technical perspective, Ethereum is currently holding the $2,480 and $2,310 levels as support, with the $2,111 level being the main support in the short term. If the bulls fail to defend this level, the next test level would be $2,000. On the resistance side, the $2,723 level is considered close, with the next resistance levels for a recovery being $2,920 and $3,213.

The overall market sentiment remains negative, with several altcoins also experiencing significant losses. Bitcoin's dominance has increased slightly, and the market cap of Tether-USDT has also increased as a result of the market sell-off. However, the long-term bullish trajectory for Ethereum remains intact, and a major recovery is still possible.